Baxter International Inc. Announces It Will Split into Two Companies; Stocks Soar (BAX)

Baxter International (BAX) announced early on Thursday morning that it would be splitting into two publicly-traded, independent, global, healthcare companies.

Similar to when Abbott Labs (ABT) split off AbbVie inc. (ABBV), Baxter’s plan is for one of the companies to be focused entirely on medical products and the other to be focused on developing pharmaceuticals.

Baxter’s CEO, Robert L. Parkinson, Jr., had the following to say about the propose split: ”Baxter has an established history of executing successful spinoffs, and we have continued to evaluate the separation of these two businesses in response to diverging business dynamics and the rapidly changing macro-environment. This decision underscores Baxter’s commitment to ensuring its long-term strategic priorities remain aligned with shareholders’ best interests, while improving our competitive position and performance, enhancing operational, commercial and scientific effectiveness and creating value for patients, healthcare providers, and other key stakeholders.”

Baxter noted that both companies will be in a good position to succeed as Baxter’s pharmaceutical business made $6 billion in revenue last year, while its medical products business brought in $9 billion. Baxter did not mention whether both of the companies will still be paying dividends, but if the aforementioned Abbott split is anything to go by, both companies will continue with dividends.

Baxter stock was up $7.71, or 11%, in pre-market trading. YTD, the company’s stock is up 1.29%.